STOCKHOLDERS AGREEMENT
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STOCKHOLDERS AGREEMENT dated as of November 6, 2007 (this
"AGREEMENT") by and among GenuTec Business Solutions, Inc., a Delaware
corporation (the "Company"), Technology Investment Capital Corp., a Maryland
corporation ("TICC") and SeaView Mezzanine Fund LP, a Delaware limited
partnership ("SEAVIEW"; TICC and Seaview and their respective permitted
successors and assigns are hereinafter sometimes referred to collectively as
"STOCKHOLDERS" and each individually as a "STOCKHOLDER").
WHEREAS, on the date hereof, Seaview is the record and beneficial
owner of 51,508 shares (the "SERIES D SHARES") of Series D Convertible Preferred
Stock, par value $.0001 per share, of the Company ("SERIES D PREFERRED STOCK",
which shares are convertible into 103,016,000 shares of the Company's Common
Stock (subject to certain adjustments); and TICC is the record and beneficial
owner of 152,394 shares (the "SERIES C SHARES") of Series C Convertible
Preferred Stock, par value $.0001 per share, of the Company ("SERIES C PREFERRED
STOCK"), which shares are convertible into 304,788,000 shares of the Company's
Common Stock (subject to certain adjustments); and
WHEREAS, the Stockholders desire to provide herein for certain
matters relating to the control and operation of the Company and to restrict the
transfer of shares of Preferred Stock and Common Stock of the Company;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement the following terms
shall have the following meanings:
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Class A voting common stock, par value
$.0001 per share, of the Company.
"OUTSTANDING ON A FULLY DILUTED BASIS" means, as of any date of
determination, with respect to the shares of Common Stock, (a) all shares of
Common Stock that are issued and outstanding on such date of determination, and
(b) all shares of Common Stock that would be outstanding as of such date of
determination assuming the exercise of all outstanding options, warrants or
other rights that are on such date exercisable to purchase or acquire Common
Stock and the conversion or exchange of all outstanding shares of Preferred
Stock or other securities that by their terms are on such date convertible into
or exchangeable for shares of Common Stock.
"PERSON" means an individual, a corporation, a partnership, an
association, a limited liability company, a trust, or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
"PREFERRED STOCK" means the Series C Preferred Stock and the Series
D Preferred Stock.
"PRO RATA SHARE" means, with respect to any Stockholder, the
quotient obtained by dividing (i) the number of shares of Common Stock (if any)
held by such Stockholder plus the number of shares of Common Stock into which
the shares of Preferred Stock held by such Stockholder (if any) are at the time
convertible, by (ii) the aggregate number of shares of Common Stock (if any)
held by both of the Stockholders plus the number of shares of Common Stock into
which the shares of Preferred Stock held by both of the Stockholders (if any)
are at the time convertible.
"QUALIFIED PUBLIC OFFERING" means an underwritten public offering by
the Company of its Common Stock for cash pursuant to an effective registration
statement under the Securities Act (other than a registration relating solely to
employee benefit plans or solely to a transaction described in Rule 145(a) of
the Commission) in which the net proceeds to the Company are not less than
$25,000,000.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means collectively the Series C Shares, the Series D
Shares, and any shares of Common Stock into which any of the Series C Shares or
Series D Shares may hereafter be converted.
"TRANSFER" means any sale, assignment, transfer, pledge,
hypothecation, gift, encumbrance or other disposition of Shares.
2. RESTRICTIONS ON TRANSFER.
2.1 GENERAL RESTRICTIONS. Subject to the terms of this Agreement,
during the term of this Agreement, neither of the Stockholders may Transfer any
Shares now owned or hereafter acquired by it unless such Transfer shall be made
in accordance with the provisions of this Agreement. Any attempted Transfer of
Shares other than in accordance with this Agreement shall be null and void and
the Company shall refuse to recognize any such Transfer and shall not reflect on
its records any change in record ownership of Shares pursuant to any such
Transfer.
2.2 TAG-ALONG RIGHTS.
(a) Subject to the provisions of paragraph (c) of this Section
2.2, at least fifteen (15) days prior to any proposed Transfer by a
Stockholder, such Stockholder (the "TRANSFERRING STOCKHOLDER") will give
written notice (the "TRANSFER NOTICE") to the other Stockholder, setting
forth (i) the number and class or series of Shares proposed to be sold by
the Transferring Stockholder (the "OFFERED SHARES"), (ii) the anticipated
date of the proposed Transfer and the identity of the proposed
transferee(s), and (iii) the material terms of the proposed Transfer,
including the cash and/or other consideration to be received in respect of
such Transfer and any deferred-payment terms.
(b) Upon receipt of a Transfer Notice, then subject to all of the
provisions of this Section 2.2, the other Stockholder will have the right,
but not the obligation, to elect to participate in the proposed Transfer
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by delivering written notice to the Transferring Stockholder within ten
(10) days after the effective date of such Transfer Notice. The
Stockholder so electing will be entitled to sell in the proposed Transfer,
at the same price and on the same terms as specified in the Transfer
Notice, (i) to the extent that the Offered Shares are comprised of shares
of Preferred Stock, up to the number of shares of Preferred Stock equal to
the product obtained by multiplying (A) such Stockholder's Pro Rata Share
by (B) the aggregate number of shares of Preferred Stock to be sold in the
proposed Transfer, and (ii) to the extent that the Offered Shares are
comprised of shares of Common Stock, up to the number of shares of Common
Stock equal to the product obtained by multiplying (A) such Stockholder's
Pro Rata Share by (B) the aggregate number of shares of Common Stock to be
sold in the proposed Transfer. The Transferring Stockholder will be
entitled to sell in the proposed Transfer the balance of the shares of
Preferred Stock and/or Common Stock proposed to be so sold. The
Transferring Stockholder will use its best efforts to obtain the agreement
of the prospective transferee(s) to the participation of the other
Stockholder in any proposed Transfer and will not Transfer any shares of
Preferred Stock or Common Stock to such prospective transferee(s) unless
such prospective transferee(s) allows the participation of the other
Stockholder on the terms specified herein. Subject to the foregoing, the
Transferring Stockholder may, within ninety (90) days after the expiration
of the twenty (15) day period referred to above, consummate the Transfer
(reduced by the number of shares of Preferred Stock or Common Stock, as
the case may be, with respect to which the other Stockholder shall have
elected to participate, if any) as described in the Transfer Notice.
However, if such Transfer is not consummated within such ninety (90) day
period, the Transferring Stockholder will not consummate the Transfer
without again complying with all of the provisions of this Section 2.2.
(c) The provisions of this Section 2.2 shall not be applicable at
any time when TICC and Seaview, taken together, in the aggregate shall own
(or would own, assuming conversion of all shares of Preferred Stock then
owned by them into Common Stock) less than 50% of the shares of Common
Stock that are then Outstanding on a Fully Diluted Basis.
2.3 RESTRICTIVE LEGENDS. Each certificate evidencing Shares held
by a Stockholder shall contain restrictive legends substantially as follows:
"The sale, assignment, transfer, pledge, encumbrance, or other
disposition of the shares evidenced by this certificate, or any
interest in such shares, is restricted by the terms of a
Stockholders Agreement dated as of November 6, 2007, as it may be
amended or modified from time to time, on file at the principal
office of the corporation. No such sale, assignment, transfer,
pledge, encumbrance or other disposition shall be effective unless
and until the terms and conditions of the aforesaid Stockholders
Agreement shall have been complied with in full."
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and the
rules and regulations thereunder (the "Act"), or under the
securities laws of any state, and may not be pledged, hypothecated,
sold or transferred unless registered and qualified under the Act
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and, if applicable, state securities laws, or in the opinion of
counsel reasonably satisfactory to the corporation such registration
and qualification are not required."
3. GENERAL PROVISIONS.
3.1 NOTICES. All notices hereunder shall be in writing and shall
be conclusively deemed to have been received and shall be effective (a) on the
day on which delivered if delivered personally or transmitted by facsimile
transmission, (b) one Business Day after the date on which the same is delivered
to a nationally recognized overnight courier service, (c) three Business Days
after being sent by registered or certified United States mail, return receipt
requested, or (d) if sent by e-mail as provided below, and shall be addressed:
(a) If to TICC, to:
Technology Investment Capital Corp.
0 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
E-mail: xxxxxxxxxx@xxxx.xxx;
(b) If to Seaview or the Company, to:
SeaView Mezzanine Fund LP
c/o SeaView Capital Advisors, LP
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxxxxxxxxxxxxxxxxx.xxx
or to such other address or addresses or telecopy number or numbers as any of
such Persons may most recently have designated in writing to the others by such
notice. Notices and other communications sent to an e-mail address shall be
deemed received upon the sender's receipt of an acknowledgement from the
intended recipient (such as by the "return receipt requested" function, as
available, return e-mail or other written acknowledgement), PROVIDED that if
such notice or other communication is not sent during the normal business hours
of the recipient, such notice or communication shall be deemed to have been sent
at the opening of business on the next Business Day.
3.2 EQUITABLE RELIEF. The parties hereto agree that legal
remedies may be inadequate to enforce the provisions of this Agreement and that
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this Agreement.
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3.3 AMENDMENTS AND WAIVERS. Any provision of this Agreement may
be amended or waived only if such amendment or waiver is in writing and is
signed by each of the parties hereto.
3.4 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective personal representatives, heirs, successors and assigns, PROVIDED
that no Person (other than a Stockholder) to whom Shares are Transferred in
accordance with the terms of this Agreement shall be deemed to be a Stockholder
or shall have any rights or be subject to any obligations hereunder.
3.5 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York (without
giving effect to conflict of laws principles other than the provisions of
Section 5-1401 of the New York General Obligations Law).
3.6 COUNTERPARTS. This Agreement may be signed in any number of
counterparts, and by each party in separate counterparts, each of which shall be
an original, but all of which together shall constitute one and the same
instrument.
3.7 CAPTIONS. The captions in this Agreement are included for
convenience of reference only, do not constitute a part hereof and shall be
disregarded in the interpretation or construction hereof.
3.8 ENTIRE AGREEMENT. This Stockholders Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all previous agreements, whether written or oral, relating
to the same subject matter. All such previous agreements, if any, among the
parties hereto (or any of them) are hereby terminated and shall have no further
force or effect.
3.9 TERMINATION. This Agreement shall terminate upon the
successful completion of a Qualified Public Offering.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
TECHNOLOGY INVESTMENT CAPITAL CORP.
By: /s/ Xxxx X. Xxxxxxxxx
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Name: Xxxx X. Xxxxxxxxx
Title: President
SEAVIEW MEZZANINE FUND LP
By: SeaView GP, LLC, its general partner
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Member
GENUTEC BUSINESS SOLUTIONS, INC.
By: /s/ Xxx X. Xxx, Xx.
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Name: Xxx X. Xxx, Xx.
Title: President and CEO
